As a good steward of your money, you understand the importance of paying off credit card debt, but you also know you need to save aggressively for retirement. However, determining which should be your first priority can be perplexing.
The answer in most cases is that you can—and should—focus on both. Paying off debt is critical to your financial independence. But along with paying your creditors, it’s important to pay yourself in the form of retirement savings.
This approach makes sense for two reasons.
First, if you wait until your debts are paid off completely, you may never begin saving. And the later you begin saving, the less time your money can benefit from the power of compounded earnings over time.
Second, seeing your savings accumulate provides the emotional and psychological boost many people need to keep moving forward.
Remember that financial professionals are here to help. Don’t hesitate to get in touch to talk about ways to manage debt while saving for retirement.
Maximize Your Social Security Benefits
Most people understand that waiting until full retirement age (66 for those born between 1943 and 1959, and 67 for those born in 1960) to begin receiving Social Security benefits is a smart decision. After all, why leave money on the table? Yet life doesn’t always work out as planned, which can create a situation where you need to begin taking benefits earlier than expected.
Here’s an example:
If a spouse is entitled to a higher retirement benefit, it makes sense for them to wait until full retirement age to tap into their benefits. A non-working spouse is eligible to start drawing income under their partner’s name as early as age 62, but only if that partner is already taking benefits. If the couple needs the income stream at that time, taking it may be a smart move.
But remember, once you start drawing those monthly checks, your benefit level is locked in.
When it comes to taking Social Security, there’s a surprisingly large number of timing options. An experienced retirement planner can assist you with planning for different scenarios to help ensure you have a strategy in place that fits your needs and circumstances. Reach out if you'd like to talk about your needs and concerns.